SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
FRANCHISE FINANCE CORPORATION OF AMERICA
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
1) Amount previously paid:
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2) Form, Schedule or Registration No.
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3) Filing party:
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4) Date filed:
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[GRAPHIC OMITTED]
FRANCHISE FINANCE
CORPORATION OF AMERICA
17207 NORTH PERIMETER DRIVE
SCOTTSDALE, ARIZONA 85255-5402
Dear Shareholder:
On behalf of the Board of Directors, I cordially invite you to attend
the 1998 Annual Meeting of Shareholders of Franchise Finance Corporation of
America to be held at The Scottsdale Princess Resort, 7575 East Princess Drive,
Scottsdale, Arizona on Wednesday, May 13, 1998 at 10:00 a.m. local time.
The Notice of Annual Meeting of Shareholders and the Proxy Statement
that follow describe the business to be conducted at the meeting. We will also
report on matters of current interest to our shareholders.
Whether you own a few or many shares of stock of Franchise Finance
Corporation of America, it is important that your shares be represented. If you
cannot personally attend the meeting, we encourage you to make certain you are
represented at the meeting by signing and dating the accompanying proxy card and
promptly returning it in the enclosed envelope. Returning your proxy card will
not prevent you from voting in person, but will assure that your vote will be
counted if you are unable to attend the meeting.
Sincerely,
/s/ Morton H Fleischer
March 31, 1998 Morton H. Fleischer, President, Chief
Executive Officer and Chairman of the Board
<PAGE>
[GRAPHIC OMITTED]
FRANCHISE FINANCE
CORPORATION OF AMERICA
17207 NORTH PERIMETER DRIVE
SCOTTSDALE, ARIZONA 85255-5402
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NOTICE OF 1998 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 13, 1998
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Meeting") of Franchise Finance Corporation of America (the "Company") will be
held on Wednesday, May 13, 1998 at 10:00 a.m. local time, at The Scottsdale
Princess Resort, 7575 East Princess Drive, Scottsdale, Arizona for the following
purposes:
1. To elect twelve directors to the Board of Directors.
2. To ratify the selection of Arthur Andersen LLP as the
Company's independent auditors for the fiscal year ending
December 31, 1998.
3. To transact such other business as may properly come before
the Meeting and at any postponements or adjournments thereof.
Only shareholders of record at the close of business on March 18, 1998
are entitled to notice of and to vote at the Meeting or at any postponements or
adjournments thereof.
You are cordially invited and urged to attend the Meeting. All
shareholders, whether or not they expect to attend the Meeting in person, are
requested to complete, date and sign the enclosed form of Proxy and return it
promptly in the postage paid, return-addressed envelope provided for that
purpose. By returning your Proxy promptly you can help the Company avoid the
expense of follow-up mailings to ensure a quorum so that the Meeting can be
held. Shareholders who attend the Meeting may revoke a prior proxy and vote in
person as set forth in the Proxy Statement.
THE ENCLOSED PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS OF THE
COMPANY. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF THE
PROPOSED ITEMS. YOUR VOTE IS IMPORTANT.
By Order of the Board of Directors
/s/ C H Volk
Christopher H. Volk, Secretary
Scottsdale, Arizona
Dated: March 31, 1998
<PAGE>
FRANCHISE FINANCE CORPORATION OF AMERICA
17207 North Perimeter Drive
Scottsdale, Arizona 85255
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PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
To be held May 13, 1998
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GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation
of proxies by and on behalf of the Board of Directors (the "Board") of Franchise
Finance Corporation of America, a Delaware corporation (the "Company"), for use
at the Annual Meeting of Shareholders of the Company to be held at The
Scottsdale Princess Resort, 7575 East Princess Drive, Scottsdale, Arizona, on
Wednesday, May 13, 1998 at 10:00 a.m. local time, and at any and all
postponements or adjournments thereof (collectively referred to herein as the
"Meeting"). This Proxy Statement, the accompanying form of proxy (the "Proxy")
and the Notice of Annual Meeting will be first mailed or given to the Company's
shareholders on or about March 31, 1998.
Because many of the Company's shareholders may be unable to attend the
Meeting in person, the Board solicits proxies by mail to give each shareholder
an opportunity to vote on all matters presented at the Meeting. Shareholders are
urged to: (i) read this Proxy Statement carefully; (ii) specify their choice in
each matter by marking the appropriate box on the enclosed Proxy; and (iii)
sign, date and return the Proxy by mail in the postage-paid, return addressed
envelope provided for that purpose.
All shares of the Company's common stock, $.01 par value per share (the
"Shares"), represented by properly executed and valid Proxies received in time
for the Meeting will be voted at the Meeting in accordance with the instructions
marked thereon or otherwise as provided therein, unless such Proxies have
previously been revoked. Unless instructions to the contrary are marked, or if
no instructions are specified, Shares represented by the Proxies will be voted
for the proposals set forth on the Proxy, and in the discretion of the persons
named as proxies on such other matters as may properly come before the Meeting.
Any Proxy may be revoked at any time prior to the exercise thereof by submitting
another Proxy bearing a later date or by giving written notice of revocation to
the Company at the Company's address indicated above or by voting in person at
the Meeting. Any notice of revocation sent to the Company must include the
shareholder's name and must be received prior to the Meeting to be effective.
VOTING
Only persons holding Shares of record at the close of business on March
18, 1998 (the "Record Date") will be entitled to receive notice of and to vote
at the Meeting. On the Record Date there were 47,885,524 Shares outstanding,
each of which will be entitled to one vote on each matter properly submitted for
vote to the Company's shareholders at the Meeting. The presence, in person or by
proxy, of holders of a majority of outstanding Shares entitled to vote at the
Meeting constitutes a quorum for the transaction of business at the Meeting.
1
<PAGE>
The election of each director nominee requires the affirmative vote of
a plurality of the Shares cast in the election of directors at the Meeting. The
Company's shareholders are not entitled to cumulate votes with respect to the
election of directors. An affirmative vote of a majority of the votes cast at
the Meeting is required for approval of all other items being submitted to the
shareholders for their consideration.
Those Shares present, in person or by proxy, including Shares as to
which authority to vote on any proposal is withheld, Shares abstaining as to any
proposal, and broker non-votes (where a broker submits a proxy but does not have
authority to vote a customer's Shares on one or more matters) on any proposal,
will be considered present at the Meeting for purposes of establishing a quorum.
Each will be tabulated separately.
Brokers who hold shares in street name for customers have the authority
to vote on certain items when they have not received instructions from
beneficial owners. Brokers that do not receive instructions are entitled to vote
on all proposals contained in this Proxy.
Abstentions are counted in tabulations of the votes cast on proposals
presented to shareholders, while broker non-votes are not counted for purposes
of determining whether a proposal has been approved.
Votes cast by proxy will be tabulated by an automated system
administered by Gemisys Transfer Agents, the Company's transfer agent. Votes
cast by proxy or in person at the Meeting will be counted by the independent
persons appointed by the Company to act as election inspectors for the Meeting.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
It is intended that the Shares represented by properly executed Proxies
will be voted to elect the director nominees, unless authority so to vote is
withheld. Each nominee is currently a member of the Board and all of the
nominees have indicated a willingness to serve as a director if re-elected. If
elected, each nominee will serve until the 1999 Annual Meeting of Shareholders
or until his earlier removal or resignation. The Board has no reason to believe
that any of the director nominees will be unable to serve as directors or become
unavailable for any reason. If, at the time of the Meeting, any of the director
nominees shall become unavailable for any reason, the persons entitled to vote
the Proxy will vote, as such persons shall determine in his or her discretion,
for such substituted nominee or nominees, if any, nominated by the Board. There
are no family relationships among any directors and executive officers of the
Company.
The affirmative vote of a plurality of the Shares present or
represented to vote at the Meeting is necessary to elect each director nominee.
Shareholders of the Company will have an opportunity on their Proxy to vote in
favor of one or more director nominees while withholding authority to vote for
one or more director nominees.
THE BOARD RECOMMENDS THAT SHAREHOLDERS GRANT AUTHORITY FOR THE ELECTION
OF THE NOMINEES TO THE BOARD OF DIRECTORS
Directors
The following table sets forth certain information with respect to the
directors of the Company (all of whom are nominees for election or re-election):
2
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<TABLE>
<CAPTION>
Principal Occupation or Employment During the Past Director of the
Name and Age Five Years; Other Directorships Company Since
------------ ------------------------------- -------------
<S> <C> <C>
Morton H. Fleischer Director, Chairman of the Board, President and Chief Executive Officer of the June 22, 1993
(61) Company. Mr. Fleischer previously served as the President, Chief Executive
Officer and director of Franchise Finance Corporation of America I, a
Delaware corporation ("FFCA I") (a predecessor corporation of the Company)
since its formation in 1980. Mr. Fleischer has acted as an individual general
partner (or general partner of the general partner) of the eleven public
limited partnerships that were consolidated to form the Company in 1994. In
addition, he is a general partner (or general partner of the general partner)
in the following public limited partnerships whose investments are set forth
in parentheticals: Participating Income Properties 1986, L.P. (travel
plazas); Participating Income Properties II, L.P. (travel plazas);
Participating Income Properties III Limited Partnership (travel plazas); and
Scottsdale Land Trust Limited Partnership (commercial land development).
Robert W. Halliday Director and Chairman Emeritus of the Board of the Company. Mr. Halliday June 22, 1993
(78) previously served as the Chairman of the Board of the Company since its
organization and of FFCA I since its formation in 1980. He has served as a
director of several publicly held American and Canadian companies, including
Great Pacific Corporation, Mitchell Energy & Development Corporation, Boise
Cascade Corporation and Jim Pattison Enterprises.
Willie R. Barnes, Esq. Corporate and securities law attorney. Mr. Barnes has been a partner in the March 14, 1995
(66) law firm of Musick, Peeler & Garrett since June 1992. He was a partner in the
law firm of Katten, Muchin Zavis & Weitzman from March 1991 to January 1992.
He is a member of the Business Law Section of the American Bar Association,
in addition to other committees. Mr. Barnes was appointed as the Commissioner
of Corporations for the State of California in 1975 and is a member of the
California Senate Commission on Corporate Governance, Shareholder Rights and
Securities Transactions. He is currently a director and secretary of American
Shared Hospital Services.
Kelvin L. Davis Mr. Davis is President and Chief Operating Officer of Colony Capital, Inc., March 13, 1998
(34) an international real estate-related investment firm. He has been with Colony
since its formation in 1991. He also serves as Co-Managing General Partner of
Colony's active discretionary equity funds, including Colony Investors II,
L.P., and Colony Investors III, L.P. Prior to 1991, Mr. Davis was a principal
of RMB Realty, Inc. Prior to that time he was employed by Goldman, Sachs &
Co. and Trammell Crow Company.
William C. Foxley President of Foxley Cattle Company. From 1983 to 1993, Mr. Foxley served as a August 1, 1994
(63) consultant to a group of investment limited partnerships managed by Bridge
Capital of Teaneck, New Jersey. He previously served as chairman of
Flavorland Industries, a publicly held company. He is currently Chairman of
the Board of the Museum of Western Art in Denver.
Donald C. Hannah Chairman and Chief Executive Officer of U.S. Properties, Inc. Mr. Hannah is a August 1, 1994
(65) member of the Chief Executives Organization and the World Presidents'
Organization, and is a director of the Precision Standard Corporation
(NASDAQ), the Samoth Capital Corporation and the Marine Resources Foundation.
Dennis E. Mitchem Executive Director of Habitat for Humanity, Valley of the Sun, since April January 29, 1996
(66) 1996, and prior to that time was an independent management consultant for
privatization and financial services projects. From March 1994 to December
1995, Mr. Mitchem worked in Moscow serving as a consultant to the Russian
Privatization Center in the establishment of its local Privatization Centers.
From July 1992 to February 1994, he was Managing Director of CAJV, a joint
venture between Arthur Andersen LLP and Castillo Company, Inc., and managed
the Denver, Colorado, financial processing center of the Resolution Trust
Corporation. From 1954 to June 1993, he was employed by Arthur Andersen LLP,
where he became a partner in 1967 and retired as a senior partner in June
1993.
</TABLE>
3
<PAGE>
<TABLE>
Principal Occupation or Employment During the Past Director of the
Name and Age Five Years; Other Directorships Company Since
------------ ------------------------------- -------------
<S> <C> <C>
Louis P. Neeb Chairman of the Board and Chief Executive Officer of Casa Ole Restaurants, August 1, 1994
(58) Inc. since October 1995. Mr. Neeb also serves as President of Neeb
Enterprises, Inc., a restaurant consulting firm. He was President and Chief
Executive Officer of Spaghetti Warehouse, Inc., from 1991 to January 1994 and
President of Geest Foods USA from September 1989 to June 1991, prior to which
he served as President and Chief Executive Officer of Taco Villa, Inc. Mr.
Neeb spent ten years with the Pillsbury Company in various positions which
included: Executive Vice President, Pillsbury; Chairman of the Board, Burger
King; and President, Steak 'N Ale Restaurants. Mr. Neeb is also a director of
ShowBiz Pizza Time, Inc. and Silver Diner Development Inc. and was previously
a director of On the Border Cafes, Inc.
Kenneth B. Roath Chairman and Chief Executive Officer of Health Care Property Investors, Inc., August 1, 1994
(62) a real estate investment trust organized in 1985 to invest, on a net lease
basis, in health care properties. Mr. Roath is a director and chairman of the
compensation committee of Arden Realty, Inc. (NYSE). Mr. Roath is also the
past Chairman of the National Association of Real Estate Investment Trusts,
Inc. ("NAREIT"), and is currently a member of the Board of Governors of
NAREIT.
Wendell J. Smith President of W.J.S & Associates, which was established by Mr. Smith in 1984 August 1, 1994
(65) as a consultant to pension funds and pension fund real estate advisors. Mr.
Smith also serves as a director of Shurgard Storage Centers (NYSE), a real
estate investment trust organized to invest in self-storage facilities. He is
a member of the Board of Directors of Chastain Capital Corporation. He is
also a member of the Board of Directors of PGA Tour Properties, which invests
in TPC courses through the world. Mr. Smith retired in 1991 from the State of
California Public Employees Retirement System ("CALPERS"), after 27 years of
employment. During the last 21 years of his employment with CALPERS, Mr.
Smith was responsible for all real estate equities and mortgage acquisitions
for CALPERS. Mr. Smith previously served on the Western and National Advisory
Boards of the Federal National Mortgage Association, on the Advisory Board of
the Center for Real Estate Research at the University of California, and as a
director of Real Estate Investment Trust of California.
Casey J. Sylla Senior Vice President and Chief Investment Officer of Allstate Insurance August 1, 1994
(54) Company. From 1992 until July 1995, Mr. Sylla was an Executive Officer and
Vice President and head of the Securities Department of The Northwestern
Mutual Life Insurance Company.
Shelby Yastrow Mr. Yastrow is an attorney and counsel to the law firm of Sonnenschein Nath & July 24, 1997
(62) Rosenthal in Chicago, Illinois. He joined McDonald's Corporation in 1978 as
Vice President, Chief Counsel of Litigation and Assistant Secretary. He was
appointed Vice President, General Counsel of McDonald's Corporation in 1982
and Senior Vice President in 1988, before being named Executive Vice
President in 1995. He retired from McDonald's Corporation in December 1997.
Mr. Yastrow received his law degree from Northwestern University in 1959.
</TABLE>
Arrangements Regarding the Selection of Directors
Mr. Kelvin L. Davis is currently serving on the Board pursuant to the
terms of an Investor's Agreement dated March 13, 1998 (the "Investor's
Agreement"), together with a Stock Purchase Agreement dated February 13, 1998,
whereby Colony SB, LLC, a Delaware limited liability company ("Colony"), an
affiliate of Colony Capital, Inc., acquired 3,792,112 shares of the Company's
common stock and warrants to purchase an additional 1,476,908 shares of the
Company's common stock. As provided in the Investor's Agreement, Colony
Investors III, L.P., the sole managing member of Colony, may designate one
nominee for election to the Board at each annual meeting of shareholders of the
Company, so long as Colony beneficially owns common stock representing at least
50% of its initial purchase. Pursuant to the Investor's Agreement, Mr. Davis is
currently serving on the Board and is a nominee for election to the Board at the
Meeting.
4
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Board Meetings
The Board held eight (8) meetings during the fiscal year ended December
31, 1997. The Board also took action four (4) times by unanimous written
consent. During a director's tenure, no director attended fewer than 75% of the
aggregate of (i) the total number of meetings of the Board during 1997; and (ii)
the total number of meetings held by all committees of the Board on which he
served during 1997.
Committees of the Board
Audit Committee. The current members of the Audit Committee are Messrs.
Kenneth B. Roath, Chairman, Wendell J. Smith, Willie R. Barnes and Dennis E.
Mitchem. The Audit Committee makes recommendations concerning the engagement of
independent public accountants, reviews with the independent public accountants
the plans and results of the audit engagement, approves professional services
provided by the independent public accountants, reviews the independence of the
independent public accountants, considers the range of audit and non-audit fees
and reviews the adequacy of the Company's internal accounting controls. The
Audit Committee held two (2) meetings in 1997.
Executive Committee. The current members of the Executive Committee are
Messrs. Morton H. Fleischer, Chairman, Robert W. Halliday and Donald C. Hannah.
The Executive Committee has the authority to acquire, dispose of and finance
investments for the Company and execute contracts and agreements, including
those related to the borrowing of money by the Company, and generally exercise
all other powers of the Board except as prohibited by law. The Executive
Committee held two (2) meetings in 1997 and took action four (4) times by
unanimous written consent.
Compensation Committee. In 1997 the members of the Compensation
Committee were Messrs. Casey J. Sylla, Chairman, Louis P. Neeb and William C.
Foxley. The current members of the Compensation Committee are Messrs. Casey J.
Sylla, Chairman, Louis P. Neeb and Shelby Yastrow. The Compensation Committee,
among other things, advises the Board on all matters pertaining to compensation
programs and policies, establishes guidelines for employee incentive and benefit
programs, makes specific recommendations to the Board relating to salaries of
officers and all incentive awards and administers the Company's 1995 Stock
Option and Incentive Plan. The Compensation Committee held two (2) meetings in
1997 and took action one (1) time by unanimous written consent.
The Board does not presently have a separate nominating committee, the
function of which is handled by the Board as a whole.
Compensation of Directors
The Company pays an annual fee of $30,000 to its Independent Directors
(i.e., directors who are not employees of the Company or its affiliates). In
1997, the Independent Directors received 20% of such annual fee in non-qualified
stock options to purchase Shares based upon the Black-Scholes option pricing
model. During 1997, the Independent Directors agreed to use at least one-half of
their remaining annual fees received from the Company for open market purchases
of common stock of the Company. In 1997, Messrs. Barnes, Foxley, Halliday,
Hannah, Mitchem, Neeb, Roath, Smith and Sylla each received options to purchase
2,470 Shares at $24.375 per Share, the fair market value of the Shares on May 9,
1997, the date of grant. These options are exercisable when granted.
Directors who are employees of the Company are not paid director's
fees, but the Company does reimburse directors for travel expenses incurred in
connection with their activities on behalf of the Company. Each director also
receives $500 for each committee meeting the director attends, with the chairman
of the respective committee receiving $1,000 for each committee meeting.
5
<PAGE>
Executive Officers
Set forth below is certain information regarding the executive officers
of the Company, including age, principal occupation during the last five years
and the date each became an executive officer of the Company.
<TABLE>
<CAPTION>
Executive Officer
Name/Age Present Executive Office of the Company
-------- ------------------------ Since
-----
<S> <C> <C>
Morton H. Fleischer Director, Chairman of the Board, President and Chief Executive Officer of the June 22, 1993
(61) Company. Mr. Fleischer previously served as the President, Chief Executive
Officer and director of Franchise Finance Corporation of America I, a
Delaware corporation ("FFCA I") (a predecessor corporation of the Company)
since its formation in 1980. Mr. Fleischer has acted as an individual general
partner (or general partner of the general partner) of the eleven public
limited partnerships that were consolidated to form the Company in 1994. In
addition, he is a general partner (or general partner of the general partner)
in the following public limited partnerships whose investments are set forth
in parentheticals: Participating Income Properties 1986, L.P. (travel
plazas); Participating Income Properties II, L.P. (travel plazas);
Participating Income Properties III Limited Partnership (travel plazas); and
Scottsdale Land Trust Limited Partnership (commercial land development).
John R. Barravecchia Executive Vice President, Chief Financial Officer, Treasurer and Assistant June 1, 1994
(42) Secretary. Mr. Barravecchia previously served as Senior Vice President, Chief
Financial Officer and Treasurer of the Company from June 1, 1994 until July
28, 1995, and as Senior Vice President of FFCA I from October 1989 until June
1, 1994. Prior to joining FFCA I in March 1984, Mr. Barravecchia was
associated with the international public accounting firm of Arthur Andersen
LLP.
Christopher H. Volk Executive Vice President, Chief Operating Officer, Secretary and Assistant June 1, 1994
(41) Treasurer. Mr. Volk previously served as Senior Vice President-Underwriting
and Research of the Company from June 1, 1994 until July 28, 1995, and as
Vice President-Research of FFCA I from October 1989 until June 1, 1994. Mr.
Volk is a member of NAREIT and currently serves as co-chair of its Public
Relations Committee.
Dennis L. Ruben Executive Vice President, General Counsel and Assistant Secretary. Mr. Ruben June 1, 1994
(45) served as Senior Vice President and General Counsel of the Company from June
1, 1994 to January 28, 1997. Mr. Ruben previously served as an attorney and
counsel of FFCA I from March 1991 until June 1, 1994. Prior to joining FFCA
I, Mr. Ruben was a partner with the national law firm of Kutak Rock.
Stephen G. Schmitz Executive Vice President, Chief Investment Officer and Assistant Secretary. May 31, 1995
(43) Mr. Schmitz served as Senior Vice President-Corporate Finance from June 1,
1994 to January 28, 1997. Mr. Schmitz previously served as Senior Vice
President of the Company and served in various positions as an officer of
FFCA I from 1986 to June 1, 1994.
Catherine F. Long Senior Vice President-Finance, Principal Accounting Officer, Assistant June 1, 1994
(41) Secretary and Assistant Treasurer. Ms. Long served as Vice President-Finance
of the Company from June 1, 1994 to January 28, 1997. Ms. Long previously
served as Vice President-Finance of FFCA I from June 1990 until June 1, 1994.
From 1978 to May 1990, Ms. Long was associated with the international public
accounting firm of Arthur Andersen LLP.
</TABLE>
6
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the compensation awarded to, earned by,
or paid to (i) the Company's Chief Executive Officer ("CEO") during 1997, 1996
and 1995, and (ii) the Company's other four most highly compensated executive
officers whose total annual compensation exceeded $100,000 during 1997, 1996 and
1995 (the "Named Executive Officers").
<TABLE>
<CAPTION>
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SUMMARY COMPENSATION TABLE
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ANNUAL COMPENSATION LONG-TERM AWARDS
- ---------------------------------------------------------------------------------------------------------------------------------
Other Annual Securities Underlying All Other
Name and Principal Positions Year Salary($) Bonus($)(1) Compensation($) Options(#) Compensation(2)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Morton H. Fleischer 1997 $450,000 -0- -0- 200,000 -0-
Director, Chairman of the 1996 $450,000 $250,000 -0- 200,000 -0-
Board, President and Chief 1995 $400,000 $250,000 -0- -0- -0-
Executive Officer
- ---------------------------------------------------------------------------------------------------------------------------------
Christopher H. Volk 1997 $250,000 $165,000 -0- 157,000 $9,500
Executive Vice President, Chief 1996 $222,917 $125,000 -0- 30,000 $8,183
Operating Officer, Secretary and 1995 $180,122 $125,000 -0- 138,000 $9,000
Assistant Treasurer
- ---------------------------------------------------------------------------------------------------------------------------------
John R. Barravecchia 1997 $200,000 $138,000 -0- 82,000 $9,500
Executive Vice President, Chief 1996 $200,000 $100,000 -0- 30,000 $9,000
Financial Officer, Treasurer and 1995 $180,122 $100,000 -0- 138,000 $9,000
Assistant Secretary
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Stephen G. Schmitz 1997 $200,000 $193,000 -0- 92,000 $9,375
Executive Vice President, Chief 1996 $165,000 $135,000 -0- 20,000 $9,000
Investment Officer and Assistant 1995 $151,917 $100,000 -0- 138,000 $7,825
Secretary
- ---------------------------------------------------------------------------------------------------------------------------------
Dennis L. Ruben 1997 $200,000 $154,000 -0- 62,000 $9,180
Executive Vice President, 1996 $172,500 $ 86,250 -0- -0- $9,000
General Counsel and Assistant 1995 $165,000 $ 82,500 -0- 138,000 $8,775
Secretary
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) Bonus includes the amount of cash bonus earned and accrued (a) during the
period from January 1, 1997 to December 31, 1997 and paid in January 1998;
(b) during the period from January 1, 1996 to December 31, 1996 and paid in
January 1997; and (c) during the period from January 1, 1995 to December 31,
1995 and paid in January 1996.
(2) Amounts included in All Other Compensation represent matching Company
contribution amounts received under the Company's 401(k) Plan.
The foregoing compensation tables do not include certain fringe benefits
made available on a nondiscriminatory basis to all Company employees such as
group health insurance, dental insurance, long-term disability insurance,
vacation and sick leave. In addition, the Company makes available certain
non-monetary benefits to its executive officers with a view to acquiring and
retaining qualified personnel and facilitating job performance. The Company
considers such benefits to be ordinary and incidental business costs and
expenses. The aggregate value of such benefits in the case of each executive
officer and of the group listed in the above table is less than the lesser
of (a) ten percent of the cash compensation paid to each such executive
officer or to the group, respectively, or (b) $50,000, or $50,000 times the
number of individuals in the group, as the case may be, and is not included
in such table.
7
<PAGE>
Compensation Pursuant to Plans
401(k) Plan. The Company has adopted a defined contribution savings
plan (the "401(k) Plan") to provide retirement income to employees of the
Company, including the executive officers referred to in the Summary
Compensation Table. The 401(k) Plan is intended to be qualified under Section
401(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and
incorporates features permitted under Section 401(k) of the Code.
The 401(k) Plan covers all employees who have completed six months of
service. Participants can elect to contribute up to 15% of annual compensation
on a pre-tax basis. The Company provides a 100% matching contribution, in the
Company's common stock, up to 6% of annual compensation, with a maximum of
$9,500.
All participant contributions are fully vested as soon as they are
made. Company contributions are subject to a vesting schedule and are 100%
vested after six years of service. In determining the years of service, the
Company includes the time a participant was an employee of FFCA I, a predecessor
corporation of the Company. Participant contributions are invested as directed
by each participant in investment funds available under the 401(k) Plan. Full
retirement benefits are payable to each participant in a single cash payment or
an actuarial equivalent form of annuity on the first day of the month following
the participant's retirement or after his or her 65th birthday. In general, if
employment ceases before the employee reaches age 65, the vested benefits under
the 401(k) Plan are paid in full at termination of employment or a later date
elected by the participant. The 401(k) Plan provides death benefits to a
participant's beneficiary if the participant dies before his or her retirement
benefits commence or if a survivor form of annuity is in effect.
Stock Option Plans. The Company has one stock option plan, the 1995
Stock Option and Incentive Plan (the "Stock Option Plan"), under which options
may currently be granted. Directors, executive officers, other key employees and
other key persons associated with the Company are eligible to receive options
under this plan.
The Compensation Committee and the Board believe that stock-based
compensation programs are a key element in achieving the Company's continued
financial and operational success. The Company has established the Stock Option
Plan to enable directors, executive officers, other key employees and other key
persons associated with the Company to participate in the ownership of the
Company. Initially, the Company reserved 3,018,804 Shares, which equals 7-1/2%
of the Shares outstanding as of March 14, 1995, for grant under the Stock Option
Plan, and this amount may not be increased without the approval of the
shareholders. The maximum number of Shares with respect to which awards may be
granted to any one individual during any calendar year is 200,000. In addition,
Shares may not be acquired pursuant to the Stock Option Plan if the acquisition
violates the ownership limit or causes the Company to fail to qualify as a real
estate investment trust ("REIT") for federal income tax purposes.
The Stock Option Plan is designed to attract and retain directors,
executive officers, key employees and other key persons associated with the
Company and to provide incentives to such persons to maximize the Company's cash
flow available for distribution. The Stock Option Plan provides for the award to
executive officers (including officers who are also directors) and other key
employees of the Company of a broad variety of stock-based compensation
alternatives such as non-qualified stock options, incentive stock options
(unless the context indicates to the contrary, the term "option" shall refer to
both incentive and non-qualified stock options), restricted stock and
performance awards.
The Stock Option Plan is administered by the Compensation Committee,
consisting entirely of Independent Directors. The Compensation Committee shall
construe and interpret the Stock Option Plan and, subject to the express
provisions of the Stock Option Plan, is authorized to select from among the
eligible employees of the Company the individuals to whom options, restricted
stock purchase rights and performance awards are to be granted and to determine
the number of Shares to be subject thereto and the terms and conditions thereof.
The Compensation Committee is also authorized to adopt, amend and rescind rules
relating to the administration of the Stock Option Plan.
8
<PAGE>
Awards under the Stock Option Plan
Terms and Conditions of Options; Payment. Incentive stock options
granted under the Stock Option Plan are exercisable for a period of not more
than ten (10) years from the date of the grant. Any non-qualified options
granted under the Stock Option Plan are exercisable at such times, in such
amounts and during such periods as the Compensation Committee determines at the
date of the grant. Such options generally vest over a three-year period for
employees. If the optionee exercises the option, payment may be made either in
cash, certified check or other immediately available funds, with previously
issued Shares (valued as of the date of the option exercise), a combination of
cash, certified check or other immediately available funds and Shares or any
other consideration permitted under applicable law. The Compensation Committee
may allow a delay in payment up to thirty days from the date the option is
exercised; however, the Company will not issue stock certificates until it has
received full payment for the Shares.
Non-qualified Stock Options. The Compensation Committee may grant
non-qualified stock options to employee directors, officers, employees and other
persons associated with the Company and such options may provide for the right
to purchase Shares at a specified price which may be less than fair market value
on the date of grant (but not less than par value), and usually will become
exercisable in installments after the grant date. Nonqualified stock options may
be granted to employee directors, officers and employees and other persons
associated with the Company for any reasonable term.
In addition, non-employee directors of the Company will automatically
receive certain non-qualified stock options in an amount equal to 20% of the
dollar amount of the directors' annual retainer fee. The exercise price of the
options will equal the fair market value of the Company's common stock on the
date of grant. The amount of options received will be determined through the
application of the Black-Scholes option pricing model.
Incentive Stock Options. Incentive stock options are designed to comply
with the provisions of the Code and are subject to restrictions contained in the
Code, including a requirement that exercise prices are equal to at least 100% of
fair market value of the Shares on the grant date and a ten-year restriction on
the option term, but may be subsequently modified to disqualify them from
treatment as incentive stock options. To the extent the aggregate fair market
value of Shares with respect to which incentive stock options are exercisable
for the first time by the optionee during any calendar year under the Stock
Option Plan exceeds $100,000, such options shall be treated as non-qualified
options to the extent required by the Code.
Restricted Stock. Restricted stock may be sold to participants at
various prices (but not below par value) and made subject to such restrictions
as may be determined by the Compensation Committee. Typically, restricted stock
may be repurchased by the Company at the original purchase price if the
conditions or restrictions are not met. In general, restricted stock may not be
sold, or otherwise transferred or hypothecated, until the restrictions are
removed or expire. Purchasers of restricted stock, unlike recipients of options,
will have voting rights and will receive dividends prior to the time when the
restrictions lapse.
Performance Awards. The value of performance awards may be limited to
the market value, book value or other measure of the Company's common stock or
other specific performance criteria deemed appropriate by the Compensation
Committee. In making such determinations, the Compensation Committee considers,
among other factors it deems relevant, the contributions, responsibilities and
other compensation of the key employee, or person associated with the Company,
at issue. The manner of exercise, payment of consideration and term of the
performance awards are generally the same as those applying to stock options
granted under the Stock Option Plan.
The Company has not issued any performance awards.
Employment and Change-in-Control Arrangements
The Company has no employment or change-in-control agreements with any
executive officer of the Company.
9
<PAGE>
Option Grants Table
The following table provides information relating to the grant of stock
options to the Company's CEO and the Named Executive Officers during the fiscal
year ended December 31, 1997 under the Company's 1995 Stock Option and Incentive
Plan.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
OPTION GRANTS IN LAST FISCAL YEAR
-------------------------------------------------------------------------------------------------
Grant Date
Individual Grants Value(1)
-------------------------------------------------------------------------------------------------
Number of
Securities Percent of
Underlying Total Options
Options Granted to Exercise or
Granted Employees in Base Price Expiration Grant Date
Name (#)(2) Fiscal Year ($/Sh)(3) Date Present Value ($)
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Morton H. Fleischer 200,000 26.6% $26.375 1/28/07 $578,000
-------------------------------------------------------------------------------------------------
Christopher H. Volk 157,000 20.9% $26.375 1/28/07 $453,730
-------------------------------------------------------------------------------------------------
John R. Barravecchia 82,000 10.9% $26.375 1/28/07 $236,980
-------------------------------------------------------------------------------------------------
Stephen G. Schmitz 92,000 12.2% $26.375 1/28/07 $265,880
-------------------------------------------------------------------------------------------------
Dennis L. Ruben 62,000 8.2% $26.375 1/28/07 $179,180
-------------------------------------------------------------------------------------------------
</TABLE>
- -----------------------
(1) These values were calculated as of the grant date (January 28, 1997) using
the Black-Scholes option pricing model. The values shown are theoretical and
do not necessarily reflect the actual values the recipients may eventually
realize. The following assumptions were made for purposes of calculating
Grant Date Present Value: expected option term of seven years, expected
stock price volatility of 18.48% (calculated weekly over the preceding
period since the stock began trading), expected dividend yield of 6.4% and
risk-free rate of return of 5.62% (equal to the yield on a seven-year
Treasury bond at grant date). Any actual value to the officer will depend on
the extent to which the market value of the Company's stock at a future date
exceeds the exercise price.
(2) These options vest in three equal installments on the first, second and
third anniversaries of the date of grant.
(3) All options were granted at the fair market value of the Shares based upon
an average closing price for the 10 consecutive trading days prior to the
date of grant.
10
<PAGE>
Aggregated Option Exercises and Fiscal Year-End Option Value Table
The following table provides information related to the exercise of stock
options during the year ended December 31, 1997 by the CEO and each of the Named
Executive Officers and the 1997 fiscal year-end value of unexercised options.
Neither the CEO nor any of the Named Executive Officers exercised stock options
during 1997.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION VALUES
- ---------------------------------------------------------------------------------------------------------
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at FY-End (#) at FY-End
---------------------- --------------------
Name Shares Acquired Value Realized Exercisable/ Exercisable/
on Exercise (#) ($) Unexercisable Unexercisable ($)(1)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Morton H. Fleischer 0 0 66,666/333,334 $341,663/$808,337
- ---------------------------------------------------------------------------------------------------------
Christopher H. Volk 0 0 102,000/223,000 $741,250/$545,625
- ---------------------------------------------------------------------------------------------------------
John R. Barravecchia 0 0 102,000/148,000 $741,250/$498,750
- ---------------------------------------------------------------------------------------------------------
Stephen G. Schmitz 0 0 98,666/151,334 $724,163/$470,837
- ---------------------------------------------------------------------------------------------------------
Dennis L. Ruben 0 0 92,000/108,000 $690,000/$383,750
- ---------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------------
(1) Market value of underlying Shares on date of fiscal year-end minus the
exercise price. The closing price of the Company's Shares on December 31,
1997 was $27.
Compliance with Section 16(a) of
the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers and persons who own more
than ten percent (10%) of a registered class of the Company's equity securities
("10% Shareholders") to file with the Securities and Exchange Commission (the
"Commission") and the New York Stock Exchange ("NYSE") reports of ownership and
changes in ownership of equity securities of the Company and to furnish the
Company with copies of all Section 16(a) forms they file.
To the Company's knowledge (based solely upon a review of the copies of
such Section 16(a) reports furnished to the Company and written representations
that no other reports were required), for the Company's fiscal year ended
December 31, 1997, the Company's officers, directors and 10% Shareholders have
complied with the Section 16(a) filing requirements.
Compensation Committee Interlocks
and Insider Participation
In fiscal 1997, the members of the Compensation Committee were Casey J.
Sylla, Louis P. Neeb and William C. Foxley. No member of the Compensation
Committee was previously an officer or an employee of the Company or any of its
subsidiaries.
11
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
ON FISCAL 1997 EXECUTIVE COMPENSATION
The Compensation Committee of the Board is responsible for establishing
compensation policy and administering the compensation programs of the Company's
officers. The Compensation Committee is comprised of three independent outside
directors. The Compensation Committee meets at least once a year to review
executive compensation policies, design of compensation programs and individual
salaries and awards for executive officers.
Pursuant to the rules regarding disclosure of Company policies
concerning executive compensation, this report is submitted by Messrs. Sylla,
Foxley and Neeb in their capacity as members of the 1997 Compensation Committee
and addresses the Company's compensation policies for 1997 as they affected Mr.
Fleischer, the chief executive officer ("CEO"), and the Company's other
executive officers, including the Named Executive Officers.
Overview of Executive Compensation Policy
The Company's compensation philosophy for executive officers is
incentive oriented. The incentive portion of the Company's executive
compensation program is designed to be closely linked to corporate performance
and returns to shareholders. Accordingly, the Company has developed an overall
compensation strategy and specific compensation plans that tie a significant
portion of executive compensation to the Company's success in meeting specified
performance goals.
The key elements of the Company's executive compensation program
consist of salary, annual bonus and stock options. The Compensation Committee's
policies with respect to each of these elements, including the basis for the
compensation awarded to the CEO, are discussed below. The process used by the
Compensation Committee in determining executive officer compensation levels for
all of these components takes into account both qualitative and quantitative
factors. Among the factors considered by the Compensation Committee are the
recommendations of the CEO with respect to the compensation of the Company's
other key executive officers. However, the Compensation Committee makes the
final compensation decisions concerning such officers.
In making compensation decisions, the Compensation Committee considers
compensation practices and financial performance of the other industry
participants. This information provides guidance to the Compensation Committee,
but the Compensation Committee does not target total executive compensation or
any component thereof to any particular point within, or outside, the range of
results for other industry participants. However, the Compensation Committee
believes that compensation at or near the 75th percentile is generally
appropriate for the Compensation Committee to use as a framework for
compensation decisions. The specified percentiles are considered on both an
absolute basis and a size-adjusted basis (i.e., reflecting compensation levels
that are commensurate with the Company's size relative to the sizes of the other
industry participants). Specific compensation for individual officers will vary
from these levels as the result of other factors considered by the Compensation
Committee.
In making compensation decisions, the Compensation Committee also from
time to time receives assessments and advice regarding the compensation
practices of the Company and others from independent compensation consultants.
The Compensation Committee does not believe that Internal Revenue Code
Section 162(m), which denies a deduction for compensation payments in excess of
one million dollars to the CEO or a Named Executive Officer, is likely to be
applicable to the Company in the near future, but will reconsider the
implications of Section 162(m) if and when it appears that the section may
become applicable.
12
<PAGE>
Salaries
Salaries for executive officers are determined by evaluating
subjectively the responsibilities of the position held and the experience and
performance of the individual and comparing base salaries for comparable
positions at other industry participants. Subject to an executive officer's
individual performance, the Compensation Committee sets salaries at or about the
median as reflected by such information.
In evaluating the CEO's salary for 1997, the Compensation Committee
considered quantitative factors such as the Company's increased investments
resulting in the Company attaining increased market share in both the ownership
of real estate and the financing of chain properties, and increased returns to
shareholders. In addition, the Compensation Committee considered qualitative
factors such as Mr. Fleischer's development of long-term financing strategies
for the Company.
Annual Bonus
All Company employees, including the Company's executive officers and
CEO, are eligible for an annual cash bonus. The purpose of the incentive bonus
is to supplement the pay of executive officers (and other key management
personnel) so that overall total cash compensation (salary and bonus) is
competitive and properly rewards them for their efforts in achieving certain
funds from operations ("FFO") targets. FFO generally includes net income, plus
certain non-cash items, primarily depreciation and amortization. The Company's
objective is for the CEO and executive officers to be paid a mix of total cash
compensation of salary and bonus, if the target performance (as described below)
under the plan is achieved.
On an annual basis the Compensation Committee and the Board set minimum
targeted FFO per Share levels. The FFO target may be adjusted to take into
account the Company's mortgage loan securitization activities, which has the
effect of reducing FFO with respect to the interests in loans which are sold. A
bonus pool begins to be funded at the point FFO per Share exceeds the minimum
targeted level. The minimum level is 95% of target performance and is designed
to assure a threshold return to Company shareholders before a bonus pool is
funded. The pool is 10% of the amount in excess of the minimum level and if the
target FFO level is attained, the pool will be sufficient to pay the executive
officers, as well as other key management personnel, their target bonuses. Each
executive officer, including the CEO, has a target bonus of 50% of salary. There
is no cap on the size of the pool and thus bonuses in excess of the target bonus
may be earned if FFO exceeds the target level. For 1997, the FFO target level,
as adjusted, was reached.
The Board reserves the right to make whatever changes it deems
necessary in the size of the pool and to make such other changes it deems
necessary to preserve the purpose and objectives of the incentive bonus
arrangement. Accordingly, the Compensation Committee awarded additional bonuses
based on exceeding the targeted investment activity for the year.
The CEO receives a nondiscretionary annual bonus of 50% of annual
salary if the FFO target level is met. The Named Executive Officers, including
the chief financial officer and the chief operating officer, each receive half
of their target bonus (or 25% of annual salary) if the FFO target is met. The
remaining portion of each of the Named Executive Officers' bonuses is based upon
other factors with an emphasis on individual performance. Thus, the total annual
bonus for a Named Executive Officer, other than the CEO, may exceed 50% of
annual salary. Bonuses up to 97% of January 1 through December 31, 1997 salary
were earned by each executive officer under the plan. Following discussion with
the Compensation Committee, the CEO waived his nondiscretionary Annual Bonus
which, upon his recommendation, was allocated principally to the senior
executive officers of the Company. This recommendation was made by the CEO in
recognition of the exceptional performance of such senior executive officers in
1997.
13
<PAGE>
Stock Options
The long-term incentive component of the CEO's and the executive
officers' compensation is stock options. The Company believes that providing
executive officers with opportunities to acquire significant equity positions in
the Company and thus, the opportunity to share in its growth and prosperity,
through the grant of stock options will enable the Company to attract and retain
qualified and experienced executive officers. Stock options represent a valuable
portion of the compensation program for the Company's executive officers. The
exercise price of stock options has thus been tied to the fair market value of
the Company's Shares on the date of the grant, and will only have value if the
value of the Company's Shares increases. In addition, stock options are granted
to executive officers to vest annually and ratably over a three-year period from
the date of grant. The purpose of such options is to encourage long-term
dedication to the Company. Grants of stock options to executive officers are
made by the Compensation Committee upon the recommendation of senior management
and are based upon the level of each executive officer's position with the
Company, an evaluation of the executive officer's past and expected future
performance, the number of outstanding and previously granted options, and
discussions with the executive officer.
Compensation Committee:
Casey J. Sylla, Chairman
William C. Foxley
Louis P. Neeb
14
<PAGE>
SHAREHOLDER RETURN PERFORMANCE GRAPH
The graph and table below compare the cumulative total shareholder
returns (assuming reinvestment of dividends before consideration of income
taxes) of the Company's Shares, the S&P 500 Index and the NAREIT Equity Index.
The graph assumes $100 invested on June 30, 1994 in the Company's Shares and
each of the indices. The stock price performance data shown on the graph below
are not necessarily indicative of future price performance.
COMPARISON OF 42 MONTH CUMULATIVE TOTAL RETURN
AMONG FRANCHISE FINANCE CORPORATION OF AMERICA, INC., THE
STANDARD & POOR'S 500 INDEX AND THE NAREIT EQUITY INDEX
NAREIT
S&P Equity
FFCA 500 Index Index
---- --------- ------
06/94 $ 100 $ 100 $ 100
12/94 86 105 98
12/95 120 144 113
12/96 158 177 153
12/97 166 237 184
NAREIT
Measurement Period S&P Equity
(Fiscal Year Covered) FFCA 500 Index Index
--------------------- ---- --------- ------
Measurement Pt 6/30/94 $ 100.00 $ 100.00 $ 100.00
12/31/94 86.17 104.87 97.97
12/31/95 119.75 144.29 112.93
12/31/96 158.14 177.42 152.75
12/31/97 165.87 236.61 183.69
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings by reference, including this Proxy Statement, in whole or in part, the
previous report of the Compensation Committee and the Performance Graph and
Table shall not be incorporated by reference into any such filings.
15
<PAGE>
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board, upon the recommendation of the Audit Committee, has selected
Arthur Andersen LLP to serve as independent auditors of the Company for the
fiscal year ending December 31, 1998. The shareholders of the Company are being
asked to ratify this selection at the Meeting. Arthur Andersen LLP has served as
the Company's independent auditors since the Company's inception.
Representatives of Arthur Andersen LLP will be present at the Meeting and will
have the opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions from shareholders.
Although it is not required to do so, the Board is submitting its
selection of the Company's independent auditors for ratification by the
shareholders at the Meeting in order to ascertain the views of shareholders
regarding such selection. A majority of the votes cast at the Meeting, if a
quorum is present, will be sufficient to ratify the selection of Arthur Andersen
LLP as the Company's independent auditors for the fiscal year ending December
31, 1998. Whether the proposal is approved or defeated, the Board may reconsider
its selection.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL NO. 2.
16
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth information as of March 13, 1998
regarding beneficial ownership of Shares by (i) each director of the Company,
(ii) the CEO and each of the Named Executive Officers, (iii) all directors and
executive officers of the Company as a group, and (iv) all persons known to the
Company to be the beneficial owner of 5% or more of the outstanding Shares of
the Company. Unless otherwise noted in the footnotes following the table, the
persons as to whom information is given have sole voting and investment power
over the Shares beneficially owned.
<TABLE>
<CAPTION>
Shares of Common
Stock Beneficially Percent
Name Owned(1)(2) of Class
- ---- ------------------ --------
<S> <C> <C>
Morton H. Fleischer............................................. 1,413,469(3) 2.9%
Robert W. Halliday.............................................. 390,403(4) *
Willie R. Barnes................................................ 9,652 *
William C. Foxley............................................... 112,858(5) *
Donald C. Hannah................................................ 14,839 *
Dennis E. Mitchem............................................... 6,400 *
Louis P. Neeb................................................... 21,162 *
Kenneth B. Roath................................................ 12,857 *
Wendell J. Smith................................................ 12,344 *
Casey J. Sylla.................................................. 13,625 *
Shelby Yastrow.................................................. 7,960 *
John R. Barravecchia............................................ 214,809 *
Christopher H. Volk............................................. 241,558 *
Stephen G. Schmitz.............................................. 187,620 *
Dennis L. Ruben................................................. 178,786 *
Kelvin L. Davis................................................. 5,269,020(6) 10.7%
1999 Avenue of the Stars
Suite 1200
Los Angeles, California 90067
Colony SB, LLC.................................................. 5,269,020(6) 10.7%
1999 Avenue of the Stars
Suite 1200
Los Angeles, California 90067
Directors and executive officers as a group..................... 8,165,790 16.2%
(18 persons)
</TABLE>
- -----------------------
*Less than one percent
(1) Share amount and percentage figures are rounded to the nearest whole
number. All Shares not outstanding but which may be acquired by such
stockholder within 60 days by the exercise of any stock option or any
other right, are deemed to be outstanding for the purposes of
calculating beneficial ownership and computing the percentage of the
class beneficially owned by such stockholder, but not by any other
stockholder. The foregoing Share amounts include the following number
of Shares which may be acquired pursuant to stock options and warrants
exercisable within 60 days of March 13, 1998: Mr. Fleischer, 200,000
Shares; Mr. Halliday, 35,803 Shares; Mr. Davis, 1,476,908 Shares; Mr.
Mitchem, 5,369 Shares; Mr. Barravecchia, 185,333 Shares; Mr. Volk,
210,333 Shares; Mr. Schmitz, 182,000 Shares; Mr. Smith, 7,971 Shares;
Mr. Ruben, 158,666 Shares; and all executive officers and directors as
a group, 2,565,325 Shares. The Shares beneficially owned by Messrs.
Barnes, Foxley, Hannah, Neeb, Roath, and Sylla include 8,296 Shares
representing stock options currently exercisable by each individual.
The Shares beneficially owned by Mr. Davis include Shares beneficially
owned by Colony SB, LLC
17
<PAGE>
("Colony") and include 1,476,908 Shares which may be acquired pursuant
to an immediately exercisable warrant agreement. See footnote (4)
below.
(2) Does not include Shares awarded to employees as the matching portion of
the Company's 401(k) plan.
(3) Includes an aggregate of 10,000 Shares held by Donna H. Fleischer, the
wife of Mr. Fleischer.
(4) Includes 40,000 Shares held by the Halliday Foundation, of which Mr.
Halliday is a trustee, and 100,000 Shares held by a charitable
remainder trust, of which Mr. Halliday is a trustee.
(5) The Shares owned by Mr. Foxley include 20,000 Shares owned by Foxley
Cattle Company, in which Mr. Foxley has a majority ownership interest.
(6) Based upon a Schedule 13D, dated March 23, 1998. These Shares consist
of 3,792,112 Shares currently owned by Colony, and 1,476,908 Shares
which Colony has the right to acquire pursuant to an immediately
exercisable warrant agreement dated March 13, 1998. Mr. Davis, through
his ownership and control of entities affiliated with Colony, is deemed
to be the beneficial owner of the same Shares. Mr. Davis shares the
power to vote and the power to dispose of the Shares with another
affiliate of Colony.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Administrative Services Agreements. The Company has entered into
administrative services agreements (the "Administrative Agreements") with the
following entities: FFCA Management Company Limited Partnership; FFCA
Participating Management Company Limited Partnership; Perimeter Center
Management Company; Franchise Finance Corporation of America II; and Franchise
Finance Corporation of America III (collectively the "Companies"). The Companies
are affiliates of the Company primarily due to Mr. Fleischer's individual
ownership interest or interest as an individual general partner of such
entities. Mr. Fleischer and other executive officers and directors of the
Company also serve as executive officers and directors in certain of the
Companies.
The Administrative Agreements appoint the Company as administrator of
the Companies. As administrator, the Company supervises all aspects of the
operations of such Companies. The Company charges for all personnel expenses
directly attributable to the individual company and allocates overhead to the
Companies pursuant to a predetermined formula, as determined in the Company's
reasonable discretion. The Company also adds a profit percentage not to exceed
20% of the sum of the total expenses charged to each individual entity. In the
1997 fiscal year, the above Companies paid approximately $278,000 to the Company
pursuant to the Administrative Agreements.
In 1997 FFCA Mortgage Corporation, which was also an affiliate of the
Company, paid $1,032,806 to the Company pursuant to an administrative agreement
between the Company and FFCA Mortgage Corporation. FFCA Mortgage Corporation was
dissolved as of December 31, 1997.
Related Party Employment. Jeffrey Fleischer, son of Morton H.
Fleischer, is employed by the Company as Vice President. In 1997, Jeffrey
Fleischer received total cash compensation in the amount of $134,889 from the
Company. Morton H. Fleischer is the Chairman of the Board, President and Chief
Executive Officer of the Company.
SOLICITATION OF PROXIES
This solicitation is being made by mail on behalf of the Board, but may
also be made without additional remuneration by officers or employees of the
Company by telephone, telegraph, facsimile transmission or personal interview.
The expense of the preparation, printing and mailing of this Proxy Statement and
the enclosed form of Proxy and Notice of Annual Meeting, and any additional
material relating to the Meeting which may be furnished to shareholders by the
Board subsequent to the furnishing of this Proxy Statement, has been or will be
borne by the Company. The Company will reimburse banks and brokers who hold
Shares in their name or custody, or in the name of nominees for others, for
their out-of-pocket expenses incurred in forwarding copies of the proxy
materials to those persons for whom they hold such Shares. To obtain the
necessary representation of shareholders at the Meeting, supplementary
solicitations may be made by mail, telephone or interview by officers of the
Company or
18
<PAGE>
selected securities dealers. In addition, the Company has retained D.F. King &
Co., Inc. ("D.F. King") to solicit proxies from shareholders by mail, in person
and by telephone. The Company will pay D.F. King a fee of $8,000 for its
services, plus reimbursement of reasonable out-of-pocket expenses incurred in
connection with the proxy solicitation. It is anticipated that the cost of any
other supplementary solicitations, if any, will not be material.
ANNUAL REPORT
The Annual Report of the Company for the 1997 fiscal year has been
mailed to shareholders along with this Proxy Statement. The Company will, upon
written request and without charge, provide to any person solicited hereunder a
copy of the Company's Annual Report on Form 10-K for the year ended December 31,
1997, including financial statements and financial statement schedules, as filed
with the Securities and Exchange Commission. Requests should be addressed to
Ronald E. Davis, Vice President of Corporate Communications of the Company,
17207 North Perimeter Drive, Scottsdale, Arizona 85255.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Any shareholder who intends to submit a proposal at the 1999 Annual
Meeting of Shareholders and who wishes to have the proposal considered for
inclusion in the proxy statement and form of proxy for that meeting must, in
addition to complying with the applicable laws and regulations governing
submission of such proposals, deliver the proposal to the Company for
consideration no later than November 9, 1998. Such proposals should be sent to
Christopher H. Volk, Executive Vice President and Secretary of the Company, at
17207 North Perimeter Drive, Scottsdale, Arizona 85255.
OTHER MATTERS
The Board is not aware of any matters to come before the Meeting, other
than those specified in the Notice of Annual Meeting. However, if any other
matter requiring a vote of the shareholders should arise at the Meeting, it is
the intention of the persons named in the accompanying Proxy to vote such Proxy
in accordance with their best judgment.
NOTICE TO BANKS, BROKER-DEALERS AND
VOTING TRUSTEES AND THEIR NOMINEES
Please advise the Company whether other persons are the beneficial
owners of the Shares for which proxies are being solicited from you, and, if so,
the number of copies of this Proxy Statement and other soliciting materials you
wish to receive in order to supply copies to the beneficial owners of the
Shares.
19
<PAGE>
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS,
WHETHER OR NOT THEY EXPECT TO ATTEND THE MEETING IN PERSON, ARE URGED TO
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE
ENVELOPE PROVIDED FOR THAT PURPOSE. BY RETURNING YOUR PROXY CARD PROMPTLY YOU
CAN HELP THE COMPANY AVOID THE EXPENSE OF FOLLOW-UP MAILINGS TO ENSURE A QUORUM
SO THAT THE MEETING CAN BE HELD. SHAREHOLDERS WHO ATTEND THE MEETING MAY REVOKE
A PRIOR PROXY AND VOTE THEIR PROXY IN PERSON AS SET FORTH IN THIS PROXY
STATEMENT.
By Order of the Board of Directors
/s/ C H Volk
Christopher H. Volk, Secretary
Scottsdale, Arizona
March 31, 1998
20
<PAGE>
PROXY/VOTING INSTRUCTION CARD
FRANCHISE FINANCE CORPORATION OF AMERICA
c/o Gemisys Transfer Agents, P.O. Box 3287, Englewood, CO 80155-9758
ANNUAL MEETING DATE: May 13, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS
The undersigned shareholder of Franchise Finance Corporation of America
(the "Company"), a Delaware corporation, hereby constitutes and appoints
Christopher H. Volk and John R. Barravecchia, and each of them, proxies, with
full power of substitution, for and on behalf of the undersigned to vote, as
designated below, according to the number of shares of the Company's $.01 par
value common stock held of record by the undersigned on March 18, 1998, and as
fully as the undersigned would be entitled to vote if personally present, at the
Annual Meeting of Shareholders to be held at The Scottsdale Princess Resort,
7575 E. Princess Drive, Scottsdale, Arizona on Wednesday, May 13, 1998 at 10:00
a.m. local time, and at any postponements or adjournments thereof.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned. If properly executed and no direction is made, this
proxy will be voted IN FAVOR of the election of all listed nominees to the Board
of Directors and FOR each of the other items set forth on the Proxy.
Please mark boxes [X] in ink. Sign, date and return this Proxy promptly, using
the enclosed envelope.
1. Election of Directors:
<TABLE>
<S> <C>
[_] FOR ALL NOMINEES LISTED BELOW [_] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote all nominees listed below
</TABLE>
(INSTRUCTION: To withhold authority to vote for any individual nominee write
that nominee's name on the space provided below)
- --------------------------------------------------------------------------------
Morton H. Fleischer, Robert W. Halliday, Willie R. Barnes, Kelvin L.
Davis, William C. Foxley, Donald C. Hannah, Dennis E. Mitchem, Louis P.
Neeb, Kenneth B. Roath, Wendell J. Smith, Casey J. Sylla and Shelby
Yastrow
2. Proposal to ratify the selection of Arthur Andersen LLP as the
Company's independent auditors for the fiscal year ending December 31,
1998.
[_] FOR [_] AGAINST [_] ABSTAIN
<PAGE>
3. In the discretion of such proxy holders, upon such other business as
may properly come before the Meeting or any and all postponements or
adjournments thereof.
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders, dated March 31, 1998 and the Proxy Statement furnished
therewith.
Please sign exactly as name appears hereon. When shares are held by
joint tenants, both should sign. Executors, administrators, trustees and other
fiduciaries, and persons signing on behalf of corporations or partnerships,
should so indicate when signing.
Dated_______________________________________, 1998
__________________________________________________
Authorized Signature
__________________________________________________
Title
__________________________________________________
Authorized Signature
__________________________________________________
Title
To save the Company additional vote solicitation expenses, please sign,
date and return this Proxy promptly, using the enclosed envelope.
NON-VOTING INSTRUCTIONS
[_] ANNUAL MEETING. Please check here to indicate that you plan to attend
the Annual Meeting of Shareholders on May 13, 1998.
